So, you fell for the “messaging” and racked up
student loan debt to get a degree.
We discussed the messaging that we both grew up with: Go to college, live the life you want, succeed. Or, don’t and be a failure.
As I keep saying, the colleges keep the money whether you get a worthwhile degree, and any job, or not.
“You go in and you get tossed to the wolves with the financial world at 17 or 18 without any much guidance,” Sperling said. He says the data is often skewed and murky when you try to get information from your lenders
Now you can’t pay.
Student Loan Debt Options
Many are covered in the abc10.com story from which quotes herein are taken.
PSLF (Public Service Loan Forgiveness) is one option.
Ten years working for qualified non-profits.
You have to check the precise regulations and rules.
The program started in 2007, so last year was the first year for people to finish.
I blogged about PSLF regulations before, but each employer has to verify that you worked the required weekly hours to qualify.
Obviously, this is one of the long term plans.
Another of my favorite topics.
At that point, he says he had no choice but to declare bankruptcy. “I bankrupted in 2008 because of these medical bills when I was in the hospital. we bankrupted on all of the medical stuff.” But he couldn’t declare bankruptcy on his student loans because student debt lacks this protection.
Actually, to be precise, which we lawyers like to be, “declare” is a legally meaningless term.
Discharge is what you want when you file bankruptcy. You are discharged of your personal liability on a debt.
EXCEPT, for student loans, you have to file a separate suit in the bankruptcy court, and prove it would be an undue hardship for you or your dependents to have to repay the student loans.
This can be done, very fact driven in terms of your specific situation. And it cost more for attorney fees.
Just Keep Taking Classes?
Lots of my clients have done this, but still incurring more student loan debt to keep taking more classes.
The story has a different spin on this strategy:
When Randy Williams couldn’t declare bankruptcy and the penalty fees and interest in his loans continued accruing, he got creative. At 54 years old, to avoid defaulting on his loan, he stays in school, part time.
“I don’t have a major declared, and what I do is I rotate between different counties.”
This keeps his loans under non-delinquent status. After the term ends, the clock starts counting again and he has 270 days to “get back in the classes or you going to default.”
He says paying for school at community colleges is still way cheaper than paying the loan. “It costs me less than $1000 a year. The student loan payment costs me $1500 a month.”
Randy Williams says he home schools his twin teenaged sons to save them from debt, as “homeschooled get more scholarships than their counterparts and tend to score higher on their SATs. We do this to give our kids an edge if there is a chance we can avoid student debt for them.”
I asked if he expects they will all be in college at the same time and if he sees himself as an 80-year-old man sitting in a classroom? He said, “Well you know that’s only 30 years away.”
This one actually makes sense, depending on your situation. I also think the political will is there to change the student loan bankruptcy laws.